USG Corp: Smart Acquisition for This Warren Buffett Stock

We last wrote about USG Corp (NYSE:USG) in November 2006. Since then, the housing market has encountered even more turbulence and the stock has traded in sympathy.

Exacerbating the stock’s weakness was the company’s announcement in early March that it would issue stock to pay for its acquisition of California Wholesale Material Supply, Inc. [CALPLY], a building materials distribution company.

With this acquisition, USG’s subsidiary, L&W Supply, which operates specialty distribution centers throughout the United States that sell to professional contractors – the only building materials sales and distribution business of its kind that is national in scope – will increase its distribution centers from approximately 220 to 250. In particular, the acquisition will greatly expand USG’s wallboard presence in the important Western states.

We like this acquisition and our view on USG's prospects and competitive position has not changed – plus it’s always a bonus to know that Warren Buffett owns 19% of the company and has bought aggressively in the past at today’s levels.

As we have always said, however, the stock’s near-term performance will almost certainly be volatile.

We only use your contact details to reply to your request for more information.We do not sell the personal contact data you submit to anyone else.

Thank you for your interest in Seeking Alpha PROWe look forward to contacting you shortly for a conversation.

Thank you for your interest in Seeking Alpha PRO

Our PRO subscription service was created for fund managers, and the cost of the product is
prohibitive for most individual investors.
If you are an investment professional with over $1M AUM and received this message
in error, click here and you will be contacted shortly.

Thank you for your interest in Seeking Alpha PROWe look forward to contacting you when we have an individual investor product ready!